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Ueberroth Reportedly Has Put Together $412-Million Package to Bid for Eastern

Times Staff Writers

Outgoing baseball commissioner Peter V. Ueberroth has lined up financing for a bid of approximately $412 million to acquire strike-crippled Eastern Airlines, The Times learned Wednesday. The board of Texas Air Corp., the parent company of Eastern, is scheduled to meet today to consider his offer.

Ueberroth, the former head of the Los Angeles Olympics Committee, has put together a team headed by seasoned airline executive J. Thomas Talbot, who helped found two West Coast carriers--Air California and Jet America. He also has retained the Los Angeles law firm of Latham & Watkins.

Kerkorian Not Involved

But contrary to some reports, Kirk Kerkorian, Ueberroth’s friend and former employer in the airline industry, is not involved in the union-supported effort to acquire Eastern. As part of Ueberroth’s package, union members would own about 30% of Eastern Airlines in return for contract concessions.

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But even if the board of Texas Air approves Ueberroth’s offer, additional approval will be needed from a bankruptcy judge, a bankruptcy examiner, who will be appointed this week, and Eastern’s unions.

In addition, other potential hurdles exist. It was understood that Eastern has other suitors including Denver billionaire Marvin Davis, members of Chicago’s wealthy Pritzker family and Carl C. Icahn, the chairman of Trans World Airlines, all of whom might make competing offers.

Meanwhile, America West Airlines, desperately seeking a major foothold in the lucrative northeastern market, is prepared to outbid billionaire developer Donald Trump for the Eastern shuttle, the Washington Post reported industry sources as saying.

America West officials would not confirm that a formal bid had been made for the Washingtion-New York-Boston shuttle service, but a spokeswoman for the Phoenix-based airline acknowledged that the company had been talking to Texas Air about purchasing “certain (Eastern) assets.”

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It was understood that the unions initiated discussions with Ueberroth some time ago. After the strike by the International Assn. of Machinists began March 4, discussions resumed.

Talbot, representing Ueberroth, and representatives of Frank Lorenzo, chairman of Texas Air, have been negotiating for the last 10 days. Lorenzo has also met several times with Ueberroth.

Seen as a Challenge

Sources close to the talks said that Ueberroth sees not only a management and human relations challenge in seeking to preserve the airline but he believes that a significant degree of employee ownership is vital if service industries are to remain competitive in the decade ahead.

Ueberroth, who steps down as baseball commissioner this week, has steadfastly declined all comment since his name has become connected with the bid for Eastern. Pilots union officials, however, have made it clear that they would like to see Ueberroth take over the airline. Machinists union sources have been more circumspect, having earlier supported an Icahn bid.

He would bring not only airline experience to Eastern but broad knowledge of the travel business. Ueberroth created the First Travel Corp., turning it into the second-largest travel agency in North America.

Talbot runs his own real estate firm, The Talbot Co., in Newport Beach. He was one of the founders of Air California, which later became AirCal and was acquired by American Airlines. He served as legal counsel to AirCal before becoming its chairman.

In 1981, he was one of the founders and later chairman of Jet America, which was acquired by Alaska Airlines in 1987.

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Texas Air spokesman Art Kent declined to say if the company, which is privately held, was holding a board meeting today. But Frank Borman, vice chairman of the board, said that a meeting would take place.

When asked about the prospects of Ueberroth’s bid going through, Borman said: “We’ll have to wait and see.”

Borman was the chairman of Eastern for several years before being forced out three years ago, when Lorenzo bought the carrier.

Meanwhile, the board of Airline Pilots Assn. met in Miami Wednesday and continued to express guarded optimism that the Ueberroth deal would be consummated.

Await Court Decision

The pilots and other parties involved in the Eastern strike anxiously were awaiting word on the decision of U.S. Bankruptcy trustee Harold Jones on his choice of a bankruptcy examiner. Earlier this week, he indicated that he would make his recommendation to U.S. Bankruptcy Judge Burton R. Lifland by early next week, perhaps as early as today. The list of candidates includes former Defense Secretary Frank C. Carlucci and securities fraud lawyer Leon Silverman.

U.S. District Judge Edward J. Davis will hold a hearing in Miami today in response to a motion by Eastern seeking to compel its pilots to return to work. Eastern contends that the pilots are waging a strike of their own, not merely honoring the picket lines of the striking machinists.

About 90% of Eastern’s 3,600 pilots have been observing the picket lines since the strike began and this has forced Eastern to cancel about 90% of its flights. The company began training a new class of pilots this week. There are just 35 recruits enrolled in the six-week course.

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Robert E. Dallos reported from New York and Henry Weinstein from Los Angeles.


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